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Market Commentary 08/02/17

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EUR/USD – Moving Higher From Buy Zone

This afternoon we have seen the market drop into the buy zone we expected it to fall into after breaking through the demand zone yesterday morning. Since hitting the zone the market has been moving higher and is now close to moving back into the daily supply zone which caused the move into the buy zone to take place initially.

If a move back into the daily supply zone does take place we could see the market reverse back to the downside somewhere inside the supply zone I’ve drawn from the highs, because if the move down out of the daily supply zone has been caused by the banks placing sell trades to make the market reverse, these highs are the points where their sell trades have been placed. If they are making the market move back up on purpose to get more of these sell trades placed into the market, they’ll place them somewhere close to where these highs have formed.

Tomorrow I suggest you look for entries short in the supply zone found inside the daily supply zone. If the market enters the zone and produces a large bearish engulfing candle or you see a sharp drop take place consisting of multiple bearish large range candles it’s a good sign the banks are getting more sell trades placed.

USD/JPY – Falling Towards Yesterday’s Low

After making a new lower low yesterday afternoon it seemed like we would see more downside take place today, but what we’ve actually seen is a small consolidation form with the market starting to break out of this consolidation just a couple of hours ago. The market is now moving on it’s way back towards yesterday’s low and there’s a good chance we could see this low broken over the next few hours.

If we do see the market break through yesterday’s low, the supply zone I’ve drawn around today’s and yesterday’s high is the place you want to begin looking for short trades, as it will become the most recent point in the market where the banks have got a decent amount of their own short trades placed. If the market doesn’t break the low and instead starts to move higher again, a break over yesterday’s high would suggest we are going to see the market move back into the sell zone created last week, so keep an eye on this zone if you see the high broken.

AUD/USD – New Lower Low

The up-move which had just begun when yesterday’s market commentary was published was not able to push the market above the current high made on the 2nd February. The market ended up falling just before the high was reached, and earlier today this drop caused the market to fall below the low created last week. Since this new low has been made the market has started to move higher again, but the current price action is suggesting that this move higher will also fail to push the market above the high made on the 2nd February.

You can see the new low which has been made today is still quite close to the lows made yesterday and last week, which means they could all be created by the bank traders placing buy trades to make the market move up. It’s too early to tell if this is the case, but I think that if we see the market move up and break through current high then it would go some way into confirming they have got buy trades placed and want the market to move deeper into the daily supply zone before causing a large retracement to occur.

As far as entries are concerned I can’t recommend anything at the moment, but I will say that if we see a move up through the current high take place, the area where today’s move higher has originated from will become a demand zone we can use to look for entries into long trades.

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